Falling behind on your student loan payments can be overwhelming, and for many borrowers, it can feel like the beginning of a financial nightmare. Defaulting on your student loans—defined as failing to make payments for 270 days on federal loans or as soon as one missed payment on private loans—comes with serious consequences. But you don’t have to navigate it alone. At Kaplan Law Firm, we specialize in helping borrowers get back on track, and as your trusted student loan lawyer, we’re here to share actionable steps to take if you’re facing default in 2025.
Understand the Consequences of Default
Defaulting on a student loan can have serious repercussions, including:
- Damage to Your Credit Score: Your credit score can plummet, making it harder to secure loans or even rent an apartment.
- Wage Garnishment: Federal loan servicers can garnish up to 15% of your wages without going to court.
- Loss of Eligibility: You lose access to income-driven repayment plans, deferment, and forbearance options for federal loans.
- Legal Action: Private lenders may sue to recover the debt, potentially leading to court-ordered repayment plans.
- Additional Fees: Collection costs can add significantly to the amount you owe.
Recognizing these risks is the first step in addressing default proactively.
Step 1: Identify Your Loan Type
The first step is to determine whether your loans are federal or private. The type of loan you have will dictate your options for getting out of default.
- Federal Loans: These include Direct Loans, FFEL Loans, and more. The Department of Education offers specific programs to help you resolve defaults.
- Private Loans: These are issued by banks or other financial institutions, and options to address default vary by lender.
If you’re unsure about your loan type, you can access your federal loan details through the Federal Student Aid website at studentaid.gov.
Step 2: Consider Loan Rehabilitation or Consolidation (Federal Loans)
If you have defaulted on federal loans, you may be able to restore your account to good standing through one of the following options:
- Loan Rehabilitation:
- You must agree to make nine voluntary, reasonable, and affordable payments within 20 days of their due dates over 10 consecutive months.
- Rehabilitation removes the default status from your credit report, though late payments leading up to the default will remain.
- Loan Consolidation:
- You can consolidate your defaulted loans into a new Direct Consolidation Loan.
- To qualify, you must either agree to repay the loan under an income-driven repayment plan or make three consecutive, on-time payments on the defaulted loan before consolidating.
A student loan lawyer can help you weigh the pros and cons of these options and guide you through the process.
Step 3: Negotiate with Private Lenders
If you’ve defaulted on a private student loan, your options are more limited, but that doesn’t mean you’re without recourse:
- Request a Settlement: Many private lenders are willing to negotiate a settlement, especially if they believe the alternative is costly legal action.
- Explore Refinancing Options: Refinancing your private loans may lower your interest rate or monthly payments, making them more manageable.
- Seek Legal Help: A lawyer for student loans can negotiate with private lenders on your behalf to reduce the amount you owe or secure a more favorable repayment plan.
Step 4: Understand Your Rights
Both federal and private lenders are required to follow specific rules when collecting defaulted loans. For example:
- Federal Loans: Borrowers have the right to appeal wage garnishment, apply for rehabilitation, and receive clear communication about their options.
- Private Loans: Debt collectors must adhere to the Fair Debt Collection Practices Act, which prohibits harassment and other unethical practices.
If you believe your lender is violating your rights, consulting a student loan lawyer can help you hold them accountable.
Step 5: Create a Repayment Plan You Can Afford
Regardless of your loan type, developing a realistic repayment plan is key to getting back on track. Here are some tips:
- Budget Wisely: Review your monthly expenses and cut unnecessary costs to free up money for loan payments.
- Explore Assistance Programs: Nonprofit organizations and state-specific programs may offer financial assistance for student loan repayment.
Prioritize Your Loans: If you have both federal and private loans, focus on loans with the highest interest rates or the most severe consequences for default first.
Step 6: Seek Professional Guidance
Navigating student loan default can be complex, especially with the ever-changing policies and legal landscape in 2025. At Kaplan Law Firm, we specialize in helping borrowers like you find effective solutions. Whether you need help negotiating with private lenders, understanding your federal loan options, or protecting your rights, we’re here to guide you every step of the way.
With over $22 million in student loans forgiven for our clients, our experience as a trusted student loan lawyer can make all the difference in turning your financial situation around.
Don’t Wait—Act Now
If you’re facing student loan default, don’t wait for the situation to worsen. Contact Kaplan Law Firm today to schedule a consultation. Together, we’ll develop a plan to help you regain control of your finances and move toward a brighter future.